The Grand Bargain: Development Aid in an “Age of Choice”

SEATTLE — One of the biggest concerns Americans have with foreign aid is the fear that their tax dollars go to waste and do not actually help people. But there is a continuously evolving systemic process working to ensure that they do. The intergovernmental agency comprised of 34 developed countries called the Organization for Economic Cooperation and Development (OECD) maintains what is counted as official development assistance (ODA) to developing countries.

An important aspect in making sure that development aid is truly improving conditions in recipient countries is tying its distribution to certain political conditions, such as the recipient country adhering to human rights norms and democratic governance. Historically, this measure has been successful. A report from the Korea Observer analyzed data of 145 ODA recipient countries from 1981 to 2010 and found that ODA helped improved human rights in the context of globalization, meaning that the allure of integration into today’s increasingly international civil society and the global economy is a strong incentive for impoverished countries to stop human rights abuses.

Rogue Aid Complicates Global Development Progress

However, globalization’s effect of an increased diversity of global participation and interconnectivity between states has also created a new issue that is undermining this progress. Coined by the Overseas Development Institute, the “age of choice” is an evolving phenomenon of the increasing availability of development aid options outside of ODA from new emerging state actors and donors that will not attach humanitarian political stipulations to economic assistance. This is sometimes referred to as “rogue aid.”

This is dangerous in that it potentially enables the agendas of repressive regimes. For example, in 2013 the European Union withheld €13 million of aid from The Gambia over human rights concerns. Rather than curb this hardline stance, President Yahya Jammeh pulled away from traditional ODA channels and strengthened ties with donors outside of OECD member states that would be less likely to impose such sanctions, such as China, Qatar and the United Arab Emirates (UAE). Through these efforts, The Gambia secured development aid from Qatar, and the UAE, as well as $91.1 million over a series of 11 loans from the Kuwait Fund for Arab Economic Development. Even though the political situation in The Gambia changed with the deposition of Jammeh in 2017, this phenomenon is by no means limited to it alone and has been seen in many African countries.

The Grand Bargain Aims to Reform Development Aid

But by no means does this issue nullify the benevolent potential of foreign aid, and one solution in place is redirecting ODA directly towards those within developing countries working to amend humanitarian issues. First proposed in a 2016 report from the former U.N. Secretary-General’s High-Level Panel on Humanitarian Financing, The Grand Bargain is an agreement between more than 59 of the biggest donors and aid providers, including the United States. The agreement is a comprehensive restructuring of aid programs towards building more resiliency in recipient communities and strengthening of the agreement members’ humanitarian commitments.

One of the most significant measures of The Grand Bargain is a goal of aggregately raising global humanitarian funding that goes directly to local and national responders in recipient countries to 25 percent by 2020. To put this in perspective, in 2015 less than 2 percent of total humanitarian funds went directly to local NGOs in developing countries. Putting more development aid back in the hands of the organizations directly working for humanitarian change in developing countries helps combat the misuse of funds by repressive state actors.

Early Success of Pooled Funds a Sign of Progress

While the Grand Bargain is still in its early days of implementation, the United States and other Grand Bargain members as a whole are making these issues of localization of aid a priority. In terms of specific contributions from the United States, USAID is working with the World Food Programme to ensure that 25 percent of funds go directly to local NGOs, and have also contributed to humanitarian Country-Based Pooled Funds (CBPFs) in Iraq and Ethiopia. CBPFs are un-earmarked funds facilitated by the United Nations Office For The Coordination of Humanitarian Affairs (UN-OCHA) to support local humanitarian efforts during times of crisis or emergency in recipient countries.

In 2017, CBPFs received $824 million in total from 26 member states. In the same year, UN-OCHA allocated $683 million in CBPFs, $163.5 million (24 percent) of which went directly to national NGOs, surpassing the net and percentage amount recorded in the previous two years. In terms of overall progress on localization efforts, an independent June 2017 report on The Grand Bargain from the Global Public Policy Institute found that 73 percent of activities from Grand Bargain signatories were related to investments in the capacity of local and national responders, and 51 percent of signatories reported efforts to assess legal and technical barriers for funding local and national responders

This momentum already behind this shift in localization of direct aid by The Grand Bargain signatories could potentially have a tremendous positive impact. This shift is logical in that organizations already working on the ground at the local level are more efficient in effecting change, according to the former head of United Nations humanitarian affairs, Stephen O’Brien. O’Brien also gave the example that during the Ebola outbreak in West Africa, “community leaders succeeded where international actors had failed to persuade local communities to change traditional burial practices and help to end the transmission of the disease.”

More funding for these organizations would increase this type of work, especially regarding culturally sensitive issues, and put more control in the hands of those who are affected the most. While the growing trend of development aid funding beyond ODA is significant, ODA still remains the largest source of external development aid at the country level and continues to grow and be a foundation of change.